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Friendship Dairies, Inc. v. Du Mond

Supreme Court of New York, Appellate Division

May 21, 1954

In the Matter of FRIENDSHIP DAIRIES, INC., Petitioner,
v.
C. CHESTER DU MOND, as Commissioner of Agriculture and Markets of the State of New York, Respondent.

Page 148

PROCEEDING under article 78 of the Civil Practice Act (transferred to the Appellate Division of the Supreme Court in the third judicial department by an order of the Supreme Court

Page 149

at Special Term, entered in Albany County) to review a determination of respondent denying an application for an extension of a milk dealer's license.

COUNSEL

Sidney Schwartz for petitioner.

Robert G. Blabey and George G. Fiesinger for respondent.

HALPERN, J.

This is a proceeding under article 78 of the Civil Practice Act to review a determination by the Commissioner of Agriculture, denying the petitioner's application for an extension of its milk license so as to authorize it to operate an approved fluid milk plant at Friendship, New York.

Ever since 1926, the petitioner has operated an unapproved milk plant at Friendship, New York. The petitioner purchases milk from farmer-producers in the vicinity and from milk dealers and uses the milk chiefly for the manufacture of cheese products. The petitioner's license is limited to the purchase of milk for manufacturing only.

An approved plant is one which handles milk intended for human consumption in fluid form. Its facilities must be approved by a health authority in the marketing area to which the milk is shipped; and an approved plant purchases its milk only from producers whose facilities have been similarly approved. Fluid milk from the petitioner's vicinity is shipped to the New York metropolitan milk marketing area, which is administered jointly by the Commissioner of Agriculture and Markets of New York State and the Secretary of Agriculture of the United States, under regulations adopted pursuant to the provisions of sections 258-k to 258-n of the Agriculture and Markets Law and the provisions of the Agricultural Adjustment Act (U. S. Code, tit. 7, ยง 608c).

The farmer-producers from whom the petitioner obtains its milk supply are unapproved producers but in recent years there has been a definite trend in the direction of unapproved producers improving their facilities and becoming approved producers. Many of the petitioner's former producers have obtained approval and have shifted their business to approved plants. Others are in the process of improving their facilities to a point which will enable them to obtain approval.

It is obviously to the advantage of the producers to obtain approval since this enables them to sell to approved plants and to obtain the uniform or blended price as determined by the administrator under the milk marketing order. This is a higher price than the producers are able to obtain from the operators

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of unapproved plants who purchase solely for manufacturing purposes. The uniform or blended price is determined each month by the administrator on the basis of class prices which are fixed in accordance with formulas prescribed in the marketing order. Milk sold by the dealer in fluid form has the highest class price; milk used for manufacture has the lowest class price. All operators of approved plants are required to make monthly reports of the use to which they had put the milk purchased by them. A computation is made of the value of the milk at the class prices in accordance with the actual use of the milk and an average uniform price for the month is arrived at, for all the milk purchased by approved plants, subject to differentials for quality and location. The operators of approved plants are required to pay this uniform price to all their producers, regardless of the use to which the milk purchased from any particular producer had been put (see 1 N.Y. Official Compilation of Codes, Rules & Regulations, p. 163; Division of Milk Control, Order No. 126). An equalization fund or producer settlement fund is maintained by the administrator for the making of necessary adjustments. If a particular dealer's use of the milk purchased by him differs from the average use, an adjustment is made between him and the fund. If, for example, a dealer resold all his ...


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